Academic journal article Research-Technology Management

Reverse Innovation: An Interview with Vijay Govindarajan: Vijay Govindarajan Talks with Jim Euchner about the Power of Reverse Innovation and the Challenges of Getting It Right

Academic journal article Research-Technology Management

Reverse Innovation: An Interview with Vijay Govindarajan: Vijay Govindarajan Talks with Jim Euchner about the Power of Reverse Innovation and the Challenges of Getting It Right

Article excerpt

Companies have struggled with globalization on many levels. A particular difficulty has been developing products for emerging markets. In their new book, Reverse Innovation, Vijay Govindarajan and Chris Trimble take this challenge to a new level. They argue that companies will not only need to get good at innovating in emerging markets, but also learn how to bring these innovations back to their core markets. This is not an option, in their view, but an imperative. Because of the potential for reverse innovation to disrupt whole industries, companies must learn how to master it.

JIM EUCHNER [JE]: I appreciate the chance to talk to you again. We published an interview with you a few years ago about the book The Other Side of Innovation, so it's a pleasure to have a chance to talk to you about Reverse Innovation.

Reverse innovation is a relatively new concept, but one that is related to other approaches people may be familiar with. I'd like to start by asking you to help make some distinctions between reverse innovation and some related concepts. First, growth in emerging markets and innovation for the bottom of the pyramid has been discussed for a while. What's new about reverse innovation?

VIJAY GOVINDARAJAN [VG]: I think there are three major differences. First, reverse innovation is not about the bottom of the pyramid. It is about innovation outside of the top 10 percent of the economic pyramid. The top 10 percent of the people in a poor country like India are similar to those in the United States, so you don't need new innovation for them. You can send them products that Americans consume. But the top 10 percent is a very slim number. The rest of the population requires innovation. Reverse innovation is for the middle of the pyramid, and of course, it includes the bottom of the pyramid, too. So that's one difference.

The second difference is that reverse innovation is about how products that are invented in India for Indians, for example, will move to the rich world. That is a very major contradiction in many people's eyes: the product that is created for the poor man will appeal to a rich man. That's a counterintuitive argument. It's easy to see why a poor man would want a rich man's product, but it is not easy to why a rich man would want a poor man's product. That's the second difference.

The third difference is more about process. Our book, Reverse Innovation, really focuses on how you do it. Many of the books that have come before have focused on ideas and how to come up with ideas, but our book talks about how you actually make reverse innovation happen.

JE: Is reverse innovation driven by radically new ways of hitting lower price points, either through a different set of features or through innovative technology? Is it really about creating lower-cost products for an emerging market?

VG: Not really. Clearly, affordability is an important issue because people in poor countries don't have the same income as people in rich countries. But reverse innovation is not about hitting low price points; it is about creating fundamentally different products to meet the needs of people in these markets. People at the middle of the pyramid don't necessarily want low-price products; what they want is products that meet their needs.

One of the case studies in the book is about PepsiCo creating a lentil-based snack in India. I wouldn't call it a low-priced product. It's a fundamentally different product because the needs of the Indian consumers are different. Their tastes are different. Their preferences are different. Many of the innovations we have studied have affordability as an attribute, but that's not the primary issue. The primary issue is to understand the customer problem and come up with a solution that will take into consideration a variety of factors: availability of electricity, portability, durability, and of course price as well.

JE: That's helpful. …

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